Challenges Faced by Farmers in Accessing Formal Microcredit: A Case Study of Vegetable Farmers in Cikidang Village, West Java Province

Abstract

This study aims to identify the challenges faced by vegetable farmers in Cikidang Village, Lembang Sub-district,  West Java Province, in accessing formal microcredit. Using a case study-based qualitative approach, primary data was collected through in-depth interviews with 12 farmers, who were purposively selected. The results show that the majority of farmers face various constraints in accessing formal microcredit, including risk aversion (33%), limited knowledge of credit products (25%), mismatch of payment schemes with seasonal income (17%), administrative barriers (17%), and negative perceptions of loan interest related to religious principles (8%). Farmers in this study prefer to use their own capital (42%) due to risk aversion among farmers. The lack of financial literacy and lack of socialization from formal financial institutions exacerbates farmers' dependence on informal sources of financing such as traders (bandar/tengkulak), family, or bank emok. This study emphasizes the importance of policy interventions, including the development of more flexible credit repayment schemes, improved financial literacy of farmers, and more intensive socialization of formal credit products to promote financial inclusiveness and sustainability of the agricultural sector.